Investment banks are scrambling to revise up their oil price forecasts as the Middle East war cripples supply from the most important oil-producing region, with some expecting oil to surge to $150 per barrel or even higher if the Strait of Hormuz remains off limits for tanker traffic for several weeks.
Analysts at Macquarie warned of this potential price spike, while all other major investment banks hiked their first-quarter and second-quarter forecasts.
Goldman Sachs, for example, expects Brent Crude prices to average over $100 per barrel in March. Prices could surge higher if the biggest oil supply disruption in history extends into months instead of weeks, according to the Wall Street bank.
If the disruption at the Strait of Hormuz extends to two months, the average Brent Crude price could be as high as $93 per barrel in the fourth quarter, with major spikes above $100 in the coming weeks. This compares to a forecast of average $71 per barrel Brent in the final quarter of the year.
Early on Friday, Brent Crude prices traded above $100, at $100.80 per barrel, while the U.S. benchmark, WTI Crude, was trading above $95 a barrel.
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UBS, for its part, expects prices above $100 per barrel and a move higher into a more severe demand destruction territory of $120 a barrel if oil flows through the Strait of Hormuz remain choked.
Early this week, analysts at Wood Mackenzie said that Brent could surge to $150 per barrel in the coming weeks, similarly to the price spike following the Russian invasion of Ukraine in 2022.
“However, supply volumes at risk this time are dimensionally bigger – and real,” WoodMac said.
Back in 2022, oil supply was there and free flowing, and the market had to just wait out the inevitable redirection of Russian crude flows to China and India.
This time around, “In our view, US$200/bbl is not outside the realms of possibility in 2026,” WoodMac’s analysts said.
By Michael Kern for Oilprice.com
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